Exemption from Personal Income Tax and Value-Added Tax for Direct Agricultural Producers

Strategic Insights -

Direct involvement in agricultural production is exempt from personal income tax (PIT) and value-added tax (VAT), provided the prescribed conditions are met, regardless of income level. According to the Ministry of Finance, individuals directly participating in agricultural activities, such as farming, forestry, aquaculture, and fishing, are eligible for this exemption. This exemption applies to individuals who do not engage in business activities beyond agricultural production, such as trading, processing, or investing in factories.

Key Takeaways:

  • Individuals directly involved in agricultural production are exempt from PIT and VAT if they meet the prescribed conditions, regardless of income level.
  • The prescribed conditions include not engaging in business activities beyond agricultural production, such as trading, processing, or investing in factories.
  • The exemption applies to agricultural activities such as farming, forestry, aquaculture, and fishing.
  • The exemption is in accordance with Circular No. 40/2021/TT-BTC and Clause 1, Article 5 of the Law.
  • The purchasing enterprise must make a list of 01/TNDN for the purchase of agricultural products from eligible individuals.
  • Individuals who directly participate in agricultural production activities are exempt from PIT and VAT even if they earn a high revenue, as long as they meet the prescribed conditions.

Statistics:

  • The revenue threshold for exemption from VAT is VND 100 million/year.
  • The income exempt from tax includes agricultural and forestry production activities, as well as fishing and aquaculture.
  • The tax authority will redefine the price of purchasing goods and services on the list if it is higher than the market price at the time of purchase.
  • The deductible expenses include the purchase of goods and services from households and individuals who do not directly sell for individuals.

Sources:

  • Circular No. 40/2021/TT-BTC
  • Clause 1, Article 5 of the Law
  • Ministry of Finance
  • Circular No. 78/2014/TT-BTC
  • Circular No. 119/2014/TT-BTC
  • Circular No. 151/2014/TT-BTC
  • Point e, Clause 1, Article 3 of the Circular No. 15/2013 of the Minister of Finance